Small Business Thoughts

A well-structured client acquisition process which runs across multiple communication platforms; Use metrics to guide the optimization of your funnel so you can hit your business KPIs (revenue and clients). The success of a digital advertising campaign depends on a variety of factors from targeting the right audience to converting them into customers. If you don’t optimize each part of your ad with the conversion goal in mind? When looking at your website, you need to have clear goals, like making sales, building your email list or getting people to sign up for a trial or free demo. If you get someone to your website, you can’t leave the next step to chance: getting them to take action. You’re at the risk of losing prospects. Here’s what every company must consider when making sure the ad does what it’s supposed to do…

Focus on ROI

The most common mistake people make with their campaign is focusing on the visible appeal of their ad rather than the results. While your idea may appear excellent to you, there are chances that it won’t convert as expected. On the other hand, a seemingly dull deployment can sometimes bring unbelievable results. Your aim should be to focus on ROI and not the aesthetics. You may weigh the success of your campaign through metrics like CPC, CPM, conversion rates and views. These will give you a sound understanding of how your campaign is performing.

Track conversions

A conversion is defined as the completion of an action such as a sale or a sign up for a free demo. Each time someone completes the desired action, you can consider that a conversion. To establish a baseline conversion rate, you can do some quick and easy math: Divide your total number of visitors by the number of sales made. So if you have 10,000 visitors a month and make 200 sales, you have a conversion rate of 2 percent. Google Ads provides a tool that tracks all of the leads generated and shows how well they are performing. You can get insights about your promo’s performance in terms of sales, email newsletter signups, downloads, form filling and various other factors. Conversion tracking shows you which areas of your campaign are working in your favor and which ones need your attention. This data helps you make informed decisions and build a solid strategy based on what your demographic needs.

Warning: the conversion fallacy

When marketing reps sell ad space to clients, they claim that ads will create or cause behavioral change — a phenomenon typically called lift. They back up the claim by pointing to the number of people who purchase a product after seeing the ad — typically referred to as the conversion rate. To explain the difference between the two, I have my workshop attendees imagine that, on the first day of the workshop, I stood at the door handing out leaflets advertising the workshop to every attendee who walked in. I then ask them: “What’s the conversion rate on my ads?” They always correctly reply “100%” because 100% of the people who saw the ad “bought” or enrolled in the workshop. Then I ask: “How much did those ads change your behavior?” Since they had all already signed up for the class long before seeing the ad, they all reply, “Not at all.” So, while the conversion rate on my ad is 100%, the lift from the ad — the amount of behavior change it provokes — is zero.

Although my example is a bit simplistic, it shows why the confusion of lift and conversion can create problems for measuring marketing ROI. Big brands pay consultants big bucks to “target” their ads at the people most likely to buy their products. But unless the targeting is directed at customers who aren’t already prepped to buy the products, the conversion from click to cash will not generate any new revenue.  The key to making advertising pay is getting people to buy your goods (or donate to a political campaign or take a vaccine) who would not otherwise have done so.

When you dig into the data and start running experiments, you quickly learn that effects of online ads are not what you might expect. For example, in a Yahoo study, researchers found that online display ads did indeed profitably increase purchases by 5%. But almost none of that increase came from loyal, repeat customers: 78% came from people who had never clicked on an ad before and 93% of the actual sales occurred later, in the retailer’s brick-and-mortar stores, rather than through direct responses online. In other words, the standard model of online ad causality — that viewing translates into click, which then leads to purchase — does not accurately describe how ads affect what consumers do.

Target the right audience

A campaign that’s not targeted to the right people is meant to fail. You cannot just display your ad to random individuals and expect them to become your customers. To get maximum ROI from an online idea, targeting the right audience is a key step. Dedicate some time to thoroughly research your target audience.  The more specific you can get about their persona, the higher your chances of reaching the right people will be. Google Ads allows you to target your advertisements according to specific geography and demo. Having precise data about your target audience helps you make the best use of this feature.

Optimize your landing pages

A key element of your advertising funnel is the landing page. Think of it as the sales person who’s sole aim is to convert that visitor into a customer. Without a laudable landing page, your digital presence will not bring you the results you expect. Here are six bullet points on ensuring your little landing page has big conversions:

Analyze data

Tracking digital ad campaigns is tricky. Therefore, you must have an analytic platform setup correctly to view your campaigns from a 360-degree angle. Having all of your campaigns data tracked can help you analyze where your money is being spent and how much ROI you’re getting against each dollar. Use this data to make wiser marketing decisions and further optimize your campaign for a higher ROI.

The benefits of data analysis

Findings like the Yahoo study mention above may explain why Procter & Gamble and Unilever, the granddaddies of brand marketing, were able to improve their digital marketing performance even as they slashed their digital advertising budgets. In 2017, Marc Pritchard, P&G’s Chief Brand Officer, cut the company’s digital advertising budget by $200 million or 6%. In 2018, Unilever went even further, cutting its digital advertising by nearly 30%.  The result? A 7.5% increase in organic sales growth for P&G in 2019 and a 3.8% gain for Unilever.

The improvements were made possible because both companies also shifted their media spend from a previous narrow focus on frequency — measured in clicks or views — to one focused on reach, the number of consumers they touched. Data had shown that they were previously hitting some of their customers with social media ads ten to twenty times a month. This level of bombardment resulted in diminishing returns, and probably even annoyed some loyal customers. So they reduced their frequency by 10% and shifted those ad dollars to reach new and infrequent customers who were not seeing ads.

They also looked very closely at first-time buyers to understand purchase motivations, enabling them to identify, quite precisely, promising groups of under-touched customers. For example, they described in their 2019 fourth quarter earnings call that they were moving from “generic demographic targets like ‘women 18-49’” to “smart audiences” like first-time moms and first-time washing machine owners.

The tidal wave of granular, individual level, personal data created by online advertising has given us the answer to the question John Wanamaker posed. It can potentially allow marketers to measure media effects precisely and to know which messages work and which don’t. Just be sure you’re distinguishing correlation from causation, as P&G and Unilever did, and not targeting people who are already your most loyal customers.

For more information about sales funnels, view the free video entitled Marketing For Business Owners Session 2.

Copyright ©John Trenary 2021